Offshore Petroleum Licensing Bill

Debate between John Redwood and Alan Whitehead

Committee of the whole House
Tuesday 20th February 2024 Commons Chamber

[Dr Whitehead]

That was the mild version.

As the right hon. Member for Reading West (Sir Alok Sharma) has informed us, the Bill legislates for something that happens anyway. It will make no difference to bills, according to the Secretary of State. It will make no difference to our energy security, according to the former chair of BP. It will undermine the independence of the North Sea Transition Authority, according to the NSTA’s own board, and it and will reinforce the perception around the world that the UK is rowing back from climate action, according to the former COP President, the right hon. Member for Reading West. We regret that this insubstantial and damaging Bill has proceeded this far, and we will vote against it on Third Reading.

We do not need this one-clause Bill. We need instead a strategy for managing the North sea that supports our energy security, meets our climate commitments and secures the economic and jobs benefits of the transition to a low-carbon economy. We would have liked to debate a new clause setting out a new principal objective for the North Sea Transition Authority that would have put such a strategy into effect. However, because the Bill is so short and tightly drawn around the narrow issue of mandatory licensing rounds, amendments to put a more sensible strategy into place are regrettably not in order. We must therefore take the Bill on its own terms, even if that means treating it with significantly more respect than the drafters have treated this House with in presenting such a trivial and nakedly political proposal.

We have in the Bill at present two tests that should be passed if the Oil and Gas Authority is to proceed with mandatory licence issuance, and we know that the two tests cannot be failed. It is a fact that if properly drafted—we might come to that in a moment—liquefied natural gas will always be more greenhouse gas-intensive in production than UK natural gas and we will always be in a position where gas and oil produced in the UK and in a declining North sea field will not meet our total demand for gas and oil.

I learned in my first year at university—as I think the Minister did, because he did a similar degree to me—that a proposition that cannot be falsified cannot stand as a valid proposition. Here we have two completely non-valid propositions in the Bill. They are bogus and cynically contrived to give the appearance that something has to be achieved before mandatory licencing takes place. At the very least we need a test or tests that can be failed and that produce a proper level of judgment into the advisability of proceeding with such mandatory licences. The best test surely has to be whether such action is compatible with our climate change goals. The Government had previously introduced climate change compatibility tests into production generally. It is strange that these appear nowhere in the Bill.

[John Redwood]

The shadow Minister has said that getting more of our own gas out of the North sea would help our security of supply and reduce CO₂ because it would displace imported LNG, so why does he not support that proposition?

[Dr Whitehead]

The proposition before us today is for mandatory licence rounds in a declining North sea field, which would make no difference in the long term to the total amount of gas that we get out of the North sea, as everybody knows. It would instead put us firmly on the back foot as far as international climate change discussions are concerned. That is the key issue that we need to address this afternoon.

Energy Bill [Lords]

Debate between John Redwood and Alan Whitehead

Consideration of Lords message
Wednesday 18th October 2023 Commons Chamber

[John Redwood (Wokingham) (Con)]

One of the barriers will be the shortage of grid and cable capacity to link into. Is the hon. Gentleman envisaging some kind of privileged access or some solution to the grid shortage?

[Dr Whitehead]

That is not quite the subject of our debate, but the right hon. Member can see that we envisage an energetic and far-reaching proposal to develop the grid in such a way that those grid shortages are overcome, so that the grid is able to service the low carbon economy in the way we would all want it to do. In the context of what we are discussing, I remind the right hon. Member that this would be about distributed grids at a local level, rather than the national high-level grids. We need to take further action to strengthen and sort out grids at that level.

The Lords clearly continue to feel strongly about this issue; as we can see, they have sent back to us today a modified version of the original amendment, requiring the Government to consult on changes to assist community energy and, importantly, to set a timeline for proposals to be brought forward to remove barriers to the development of community energy.

Of course, there are others in this House who feel strongly about this issue. The proposals that the Lords have now twice tried to have inserted into the Bill are essentially the wording of a group called Power for the People, which suggested wording for a community energy enabling Bill for which it campaigned to secure signed-up support from parliamentarians. It did indeed secure substantial support from parliamentarians who feel strongly on the issue of community energy. Some 325 Members signed up in support, including 130 Conservative Members and, perhaps most remarkably, 22 members of the Government, including six Treasury Ministers, the present Chancellor and the Minister himself, as I often seek to remind him. There is no lack of support in the House for the principles and practice of community energy.

The Lords amendment seeks to acknowledge and further that support by putting forward very reasonable and, one might have thought, pretty non-contentious wording to add to the Bill. It is inexplicable to me that the Government should seek to resist these proposals in the way they have. Yes, they will say, as the Minister has said, that they have set up a community energy fund of £10 million over two years, which is welcome, and they have verbally indicated that, at some stage, there will be a consultation on barriers to supply, but there are no timelines for that and no commitment to move positively forward from it. That is what this amendment seeks to put right.

As I have said, the Minister appears already to be a signed-up supporter of community energy action, and I would fear for his own emotional wellbeing if he were forced today to perform another policy backflip and acquiesce in yet another Government repudiation of themselves in rejecting this latest Lords amendment. Instead, let us end the extended passage of the Bill on a high note, and all around the House agree on both the importance of community energy and the measures we will need to take to ensure it thrives in the future.

Energy Bill [Lords]

Debate between John Redwood and Alan Whitehead

Report stage
Tuesday 5th September 2023 Commons Chamber

[Dr Whitehead]

If the hon. Gentleman contains himself, he will see that we have tabled an amendment on low-carbon energy in homes. I agree that we cannot put everything in a Bill but, because of the urgency of the commitment we are making with this Bill, it is important that we get as much clarity as possible on what we are doing in the Bill now, so we know where we are going and the ways we are doing so.

Having discussed those other amendments, I will now draw attention to Labour’s amendments. I hope the House will understand why we have drafted them in this way and how that relates to the tests I mentioned. On our new clause 53, the Government say they support community and local energy. Indeed, as the Minister said, the Government have put a modest amount of funding into supporting community energy but, as the hon. Member for Hastings and Rye (Sally-Ann Hart), who is not in her place now, said, we still do not have an understanding of how community energy can actually work. We think community energy will be an important part of the decarbonisation process. It is not one of the large, shiny things upon which money will be lavished in large amounts but, in aggregate, it will have a huge impact on decarbonising energy in this country.

The Government still have not introduced arrangements that will enable local power producers to trade locally and get the proper value of their trade, which is vital to the success and certainty of these projects. Labour wants to support local energy projects practically, particularly through the “valley of death” period where the pockets of community energy are usually shallower than needed for all the planning permissions to run their course. With support from Great British Energy and local authorities, we propose that £400 million a year will eventually support the important role of community and local energy in decarbonising power.

[John Redwood]

If this electrical revolution is to take off, many more people will need to buy electric cars and heat pumps. Does the hon. Gentleman have any advice for the Government on how those items can be made more popular and more affordable?

[Dr Whitehead]

The Government and I have been in considerable discussion about precisely that point. We need to make sure we change the model of ownership of those devices. We perhaps need to have a longer debate about that on another occasion.

Nuclear Energy (Financing) Bill

Debate between John Redwood and Alan Whitehead

Report stage & 3rd reading
Monday 10th January 2022 Commons Chamber

[Dr Whitehead]

It would not be irresponsible to support the Bill on Third Reading, but it would be responsible of the Government to take a little more notice of these particular problems with the RAB process and possibly, as we move forward with its development, bring in mechanisms that can protect the bill-paying public in a rather better way than is suggested at the moment. That is essentially what the amendments do.

The arrangement for the RAB to be put into place is that a series of considerations are entered into to give an agreed expenditure cap for what is considered to be the proper use of the collection fund that will provide assistance to the company producing the new nuclear power plant. It can properly draw on that, up to a certain ceiling, from the general public. That is if everything goes well with the nuclear power plant, but of course that may not necessarily be the case. Of 176 nuclear power plants across the world, 175 went substantially over time and over budget, so we need to be very clear that we should not commit the general public to fund these proposals completely open-endedly. We are saying in these amendments that should there be a cost overrun or a time overrun, the Secretary of State should seek an increase in the agreed revenue ceiling without further recourse to customer funds. That may be by producing bonds or it may be by further state funding if that is the choice the Government wish to make, but they should not increase the ceiling for customers to pay exponentially at the same time.

These are very simple and straightforward amendments saying that, should there be such cost overruns or time overruns and there is a suggested further call on customer bills through RAB, the Secretary of State will have to think of something else to fund the system. Let us be clear that, with the RAB arrangements at the moment, it is suggested, I think very optimistically, there will be an increase of about £10 to £20 in customer bills. That is a really current topic at the moment, but a cost overrun would substantially increase such a levy on customer bills, and we just think that should not be part of the RAB arrangements for the future.

The third set of changes we wish to put in place are to part 3 of the Bill, which sets out what should happen and what arrangements should be in place if a company, despite all the investment from the public in the construction of a nuclear power plant, essentially goes bust. In this part, the Government have in effect lifted the provision in the Energy Act 2011 for a special administration regime. Again, that is rather current because it is precisely such a special administration regime that was used to rescue Bulb Energy when it went bust a little way ago. It was placed in such a regime under the 2011 Act—the wording is identical to that in this Bill—to allow it to continue trading for the time being, subject to the company being disposed of.

However, I would suggest that a nuclear power plant the size of Sizewell C, for example, is not remotely the same as an energy company the size of Bulb. It would be quite possible to dispose of Bulb or disperse its customers according to the special administration regime, but that would not be the case for a large nuclear power station. We are saying in amendment 5 that there should be an additional backstop so that, in the circumstances of a special administration regime, it would not be possible to pass the company on—to sell it on or to reintroduce it as a going concern through allocation to a subsidiary—and that the Government should have a plan to introduce a public company to take it over, provided it is working as a nuclear power station. That would not be the case—some Members may think the amendment means this—if the power station could not continue because the reactor head had exploded or the power plant was otherwise non-operational. If it is an operational power plant, we think that such a backstop should be available.

Hon. Members have mentioned what I think is the salutary case of the North Carolina energy plant that was conceived under RAB arrangements, or something very similar. Some $9 billion of customer money went into that plant, but the plant went bust, not because it was not operational, but because it was unfinanceable. Customers lost $9 billion of money, and there is no power station at the moment.

[John Redwood]

Is it not the case that, if the Government in power are faced with a big financial disaster from a very large project going horribly wrong and the company going bust, they will need flexibility to make the best decisions they can in the interests of the taxpayers and customers at the time, and it is quite difficult for us to pre-think that and embed it clearly in law?

[Dr Whitehead]

That is precisely why we wish to put in the Bill that there should be a direction in which the Government should go. Of course they should have flexibility in how they work, but we think this is an important backstop that will ensure customers do not lose their shirts in a company that goes bust after they have invested large amounts of money in its operation.

We will seek to divide the House on amendments 2 and 3 in the absence of any clear further Government commitments today in relation to. We may well be minded to support amendment 9, tabled by the SNP, should that also be put to a Division. However, I emphasise that we are happy to support the Bill overall. We want it to go through Third Reading, but we would like it to be strengthened as much as it can be by the addition of the amendments we have put forward today.

Nuclear Energy (Financing) Bill

Debate between John Redwood and Alan Whitehead

2nd reading
Wednesday 3rd November 2021 Commons Chamber

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Labour believes that new nuclear has an important supporting role to play in the energy mix, alongside the decisive shift to renewables that we need to deliver the climate transition and secure our energy security. As set out by the Climate Change Committee, we need all the low-carbon power sources at our disposal to deliver the rapid and fair transition that is required.

I am sorry that the Minister, in presenting the Bill, has chosen the partisan knockabout route, rather than giving it the serious consideration that it deserves. If we want to go down that path, we can reflect on the decade of dither and delay on the Government’s part, with mixed messages from the Conservative Government on new nuclear. The result is that, after 10 years, we have one half-finished nuclear plant, which is funded by a mechanism that, as the Minister himself accepts, is quite disastrous in terms of future prices. The record of this Conservative Government on new nuclear is frankly very poor. At last we have a Bill that might rectify some of that poor performance over the last 10 years. We need to support the need to finance new nuclear. We will scrutinise this Bill to guarantee fairness for bill payers, including protecting consumers against any potential cost overruns, protecting the poorest households, and scrutinising the balance between public spending and bill payers.

It is welcome that at long last we are coming to the key issue in nuclear power, which is how we build the power stations that we seek to place in the mix of low-carbon energy for the future. We know how not to do it, as I mentioned. We have already seen from the passage of building Hinkley C, and the disappearance of many nuclear projects and programmes, that the model that the Government have long stood for—that power stations should be built entirely by the private sector, and that private-sector security can be bought by price mechanisms that grossly inflate the cost of energy to the customer in the end—is highly flawed.

We are facing a last-chance saloon for new nuclear build that requires us to throw away those principles and start again, because most of the programme of new nuclear power stations that the Government have been envisaging over the past 10 years has been washed away. As late as 2018, there were possibly three consortia actively pursuing an interest in building five new nuclear power stations. These have progressively fallen by the wayside. Consortia have fallen apart, companies with an interest in financing projects have pulled out, and we are now left with one proto-consortium—effectively just EDF—building Hinkley C and with active plans to build a new power station at Sizewell. It is not only an active interest. Sizewell is designed to be effectively a clone of the plant that is currently being built so that it can start to build as Hinkley completes its construction phase and the workforce currently undertaking construction at Hinkley can transfer to the building of its clone at Sizewell.

We ought to add two other factors that will have a substantial bearing on how we proceed with building plants—or in this instance, a plant, because that is all we have under consideration right now. First, the consortium proposing to build Sizewell is not exactly champing at the bit to finance it. EDF has effectively mortgaged itself to the hilt in financing 65% of Hinkley C and has stated unequivocally that it is not about to do the same with Sizewell C. Secondly, we still have the arrangement in place concluded by the then Chancellor George Osborne to arrange a fast track into the heart of our nuclear programme for the China National Nuclear Corporation via a Secretary of State’s investment agreement to help fund Hinkley C power station to the tune of 35% of the upfront capital; 20% of the second in the EDF consortium’s programme, Sizewell C; and the big prize for the Chinese—control of the financing, build and running of a third nuclear power station at Bradwell in Essex, which is now unlikely, to the point of impossible, to happen.

It is likely that the Chinese will not be able to get their hands on a real nuclear power station all of their own and they will not be investing into 20% of Sizewell—indeed, the Government seem to have set aside £1.7 billion in the Budget to buy out their interest in Sizewell C. Labour has long warned that the Government are playing a dangerous game when they outsource the funding of critical national infrastructure to foreign Governments. We are now seeing the results of a decade of Conservative Governments doing exactly that, and mostly failing to get anywhere. There we have it in terms of the UK’s nuclear programme for the foreseeable future—only one plant in prospect for a start before the late 2020s.

[John Redwood]

The shadow Minister is very thoughtful on these matters. How much standby capacity does he think we need to back up the wind and solar that will be the majority of our generation in due course?

[Dr Whitehead]

Interestingly, the Climate Change Committee, which has looked into this matter in great depth, considers that in the overall long-term future make-up of our energy mix, about 8 to 10 gigawatts of standby power—therm power—is likely to be required in the shape of new or existing nuclear power stations. That is about the size of the difference with an overwhelmingly renewable but variable economy, with elements of firm power backing it up.

I have mentioned that one plant only that would be included in the suggested 8 GW to 10 GW is in prospect for a start before the late 2020s, because every other proposal has fallen away. However, it is not financed and is probably not financeable by private capital. It is only part financeable by a state financer, with which we do not now want to do business. Let us be clear before we go any further: this Bill is about finding a formula to fund and build Sizewell C power station. Whatever its generic pretensions, that is the issue we should be concentrating on. Even so, getting that plant going would cover most of what the Climate Change Committee considers is the presence in the mix needed.

Domestic Gas and Electricity (Tariff Cap) Bill

Debate between John Redwood and Alan Whitehead

3rd reading: House of Commons & Report stage: House of Commons
Monday 30th April 2018 Commons Chamber

[Dr Whitehead]

We have to bear in mind that people will be introduced to a new tariff. Indeed, we hope that by the time the market returns, the issue of people remaining on SVTs for years and not switching will be a thing of the past and there will not be SVTs in the system, but also that there will be other tariff arrangements that effectively prevent SVTs from playing the role they have played before.

[John Redwood (Wokingham) (Con)]

In amendment 6, the hon. Gentleman is trying to ensure that people get money off, which we would all like to see, but would it not be necessary to include some kind of rider so that it applies only if people are burning the same amount of energy year after year? If we went from a warm winter to a very cold one, presumably he would not think we could guarantee the same amount.

[Dr Whitehead]

Amendment 6, as I recall, would simply place the Prime Minister’s words into legislation. It was estimated that a saving of at least £100 would result from the measures, and one aim of the legislation was to bring that saving about. It does not mean that the amount would be exactly £100—indeed, had the Prime Minister not reported that to The Sun, we might have got a rather more complex version of that price promise. We are merely reflecting what was heard on that occasion, and I hope the right hon. Gentleman will take the amendment in the spirit in which it is intended.

Energy Bill [Lords]

Debate between John Redwood and Alan Whitehead

Wednesday 20th April 2016 Commons Chamber

[Andrea Leadsom]

My right hon. Friend is exactly right: this is a key, popular manifesto commitment, and we are determined to implement it, as we promised the voters of this country we would last May.

Let me turn briefly to amendment 2A, which was agreed in the other place. The amendment simply seeks to ensure that the function of determining whether an oil field project is materially complete can be transferred to the Oil and Gas Authority. That function sits outside chapter 9 of the Corporation Tax Act 2010 but elsewhere within part 8, so it does not fall within the definition of “relevant function” under clause 2(6) of the Bill. It therefore cannot be transferred from the Secretary of State to the OGA by regulations made under clause 2(2). The amendment simply removes the reference to “Chapter 9 of” from the reference to part 8 of the 2010 Act in clause 2(6), ensuring that this important function can be transferred to the OGA. The amendment is purely technical, and seeks to put beyond doubt that all key oil and gas taxation functions can be transferred to the OGA once it becomes a Government company, as we have always intended.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

The amendments we have received from the other place make a number of changes to the Bill. In most instances, as the Minister mentioned, those relate to the commencement of the closure of the RO. That is essentially because of the Bill’s progress through Parliament and the potential charge of retrospectivity against the Bill. It is good that the issue has been rectified, and that the Government have confirmed that they do not intend to backdate the closure of the RO.

However, those changes point to the issue raised in amendment 7T, with which the Government have a motion to disagree. We need to be clear that the amendment is not saying that changing the closure date for the RO for onshore wind is wrong, although I continue to contend that it is. Contrary to the impression the Minister has given this afternoon, developers of projects did not realise that the closure date would be earlier than previously thought. Indeed, the so-called warnings before the general election, which she mentioned, were not about the early closure of the RO, but about future funding for onshore wind in general. Developers of projects knew that the RO would come to an end in March 2017, and many had spent several years—a long period—in the development process before the warnings were issued, and before the policy was put forward in the manifesto and, subsequently, the Bill. Having planned on the basis of the notion that the RO would come to an end, they found out very late in the day that the goalposts had been arbitrarily moved, and that their investment was lost overnight as a result.

Nor is the amendment in any way contrary to manifesto commitments; it is not about the principle of the early closure of the RO, but about the grace periods that follow from that closure process. It is not saying that there should not be grace period exceptions for schemes that, for various reasons, might fall foul of the new, arbitrary cut-off date. By highlighting a small number of projects that have fallen foul of the cut-off date for very specific reasons, it is saying that grace-period schemes should be built on a reasonable level of equity and fairness, and should work within an understanding of proper reasons for exemption; they should not simply impose a few extended, but nevertheless still arbitrary, cut-off dates for projects.

Lords amendment 7T highlights a particularly egregious inequity in the grace-period scheme. This involves schemes that have, even according to the new guidelines laid down in the Bill process, done the right thing throughout by seeking and securing local support. As the Government said earlier in the passage of the Bill, it was to be the sine qua non of permission for the development of any onshore wind in the future that local communities should have the final say in decisions; schemes, it was said, should obtain support, perhaps through local planning approval, and should not, for example, seek to win an appeal on the basis of national determination, having been turned down at local level.

The schemes covered by the amendment fit exactly that description. They have determinedly gone through the local process and engaged with it, rather than standing back and waiting to progress through an appeal. They have won local community support, in each instance through the granting of a planning decision by the local authority. The only issue is that, having gone through that often lengthy process of local consultation, they find that the successful, locally supported outcome has, at the stroke of a pen, effectively been turned into refusal. That has happened because the final planning certificate has not arrived by the cut-off date because of issues relating not to the permission, but to details of section 106 agreements on community benefit or similar issues, or to section 75 agreements in Scotland—that is, issues that arise not as part of the agreement process, but because the agreement has been reached. As these schemes could not produce a final, formal planning certificate by the arbitrary date of 18 June, the scheme as a whole was lost.

Here is the timetable of one such scheme, the Twentyshilling Hill wind farm in Dumfriesshire. The planning application was initially made on 15 March 2013 —a long time ago. It was approved by a planning committee, subject to a section 75 agreement, on 16 December 2014. It was not the fault of the wind farm applicant that the council took a few months to settle the section 75 application. Even so, the application was agreed on 17 June—again, before the cut-off date. However, despite the agreement being public and on the council website, the final certificate did not arrive until 1 July, making it null and void in the Government’s eyes, as the Minister has stated.

In retrospect, it might have been wiser for those and other developers not to take too much time on, or give too much attention to, local agreement, but to instead precipitate an appeal that they might have won. Indeed, when developers have done just that and the appeal decision has arrived after the cut-off date of 18 June 2015—we heard of such instances during the passage of the Bill—it has been accepted because of a provision relating to the grace period. The projects are deemed to have been okay all along and are allowed to proceed. That is frankly perverse, and it falls seriously short of the test of reasonableness and equity that ought to inform any grace period arrangement.

Lords amendment 7T relates to a small number of cases and seeks to restore a semblance of equity to the process. It is based on the principle that the Government themselves promoted as the basis for decisions on onshore wind applications. It is a principle for the future that, incidentally, Labour supports.

I shall explain the equity. If a local planning committee found in favour of a planning decision before 18 June, and the decision was arrived at via a process of consultation and community acceptance of the application, it should be covered by the grace period provisions. This small amendment would affect only about half a dozen schemes. In the overall scheme of things, it would make an insignificant inroad into levy control framework financial provisions, as far as the RO is concerned. It would, however, place a much-needed patch of equity on the grace period structure, and perhaps point the way to addressing seriously a future issue. That issue is this: are the Government intent on ensuring that onshore wind will be built in the future—it is, after all, the cheapest and most cost-effective renewable available—if local communities support the proposals, or do they intend to use national clout to override local wishes in pursuit of an overall closure of onshore wind, at least in England?

Accepting the amendment and finalising the Bill in this way would go a long way to restoring a principle that was supposedly central to the process for the future, and it would demonstrate to local communities that they really will be able to decide and not have their local wishes snuffed out by a fiat from the centre.

[John Redwood]

I hope that the other place will not delay this Bill further, because many people and parties in this House, and in the other place, wish it to go through to provide measures to help our oil and gas industry, which is struggling with the collapse in the world oil price and the consequent threat to jobs and prosperity that we would like to help alleviate.

I have two main reasons for strongly supporting the Government. First, they are absolutely right to say that our energy is too dear and that their measures are a contribution to tackling the problem of very expensive energy. A tragedy is unfolding in several of our industries, most recently in the steel industry, where the consequences of very high energy costs compared with those of our competitors around the world are manifest, especially the impact on output, profit, loss and loss of jobs. We desperately need to do more to tackle the problem of very expensive energy, so I admire the Government’s urgency in tackling one of its sources. The subsidy withdrawal is entirely appropriate.

One of the problems with wind energy—this makes it a very high-cost way of offering generating capacity—is that back-up capacity needs to be built to generate the power by some other means, because there will be times of the day, days of the week and weeks of the year when there is no wind. At such times, we are entirely reliant on the back-up power, and that requires a full range of back-up. There will always be extra costs involved with such an unreliable renewable source of energy.

On cost grounds, it is vital that we make rapid progress. I think that good notice was given—the election was notice enough, I would have thought. It was a prominent and popular policy. None of us was shy about debating it and we got a lot of support from many people.

The second main reason why I think the Government are right to take this action is that wind is so intermittent and unreliable. Therefore, if there is too much wind, the problems of managing and balancing the system become that much greater. As the Member of Parliament who represents the control centre on Bearwood Road in Wokingham, I am only too well aware of how its task is made much more expensive and complicated the more interruptible and unreliable energy there is on the system. The Government’s measure will be a welcome check on that. It will help it to manage the system better and to provide more reliable power for industry.

If there is too much unreliable power on the system and that power goes down, it is industry and commerce that will take the hit. They will be asked to forgo the use of power when there is no wind, but when we are desperately trying to compete in a very competitive world, surely it is important not just to keep the lights on in people’s households, but to keep the factories turning over.

Energy Bill [Lords]

Debate between John Redwood and Alan Whitehead

Monday 14th March 2016 Commons Chamber

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I rise to speak to our amendments 24 to 33 and 40 to 46, which, although standing individually, form a collective whole and refer to successive amendments the Government made to the Bill in another place in Committee to bring forward the closure date of the renewables obligation from 31 March 2017 to 31 March 2016. Our amendments would move that date and those of the various grace periods to 1 March 2017. They would therefore bring forward the closure date by one month, rather than one year, as is the present proposal.

I have some fears about the robustness of the present closure date in the face of the Bill’s passage. We are discussing a closure date that is very close to the day on which we are actually discussing it. The passage of the Bill, given that it came from the other place in the first instance, will have to finish in the other place shortly. The fact that the closure date before us is just a fortnight or so away from today creates considerable difficulties for the closure of the RO itself. It is not the case that we are discussing something that does not exist that can be brought into existence under legislation. We are discussing something that not only exists but, if we do nothing by way of legislation, will continue to carry on until 31 March 2017. We are discussing something that is in the legislation already, in that there is a specific mention in the Bill that the RO comes to an end on 31 March 2017, so if nothing happens to stop the RO carrying on, it will carry on until that date. In a sense, then, we have just one go in this place at changing the date in the legislation. If the Bill continues its passage through Parliament after the closure date has come into being, we will be dealing with retrospective legislation.

[John Redwood]

Is it not the case that from the moment people knew who had won the general election, they knew what would be Government policy in this area and they knew that it would be done as expeditiously as possible? Surely everyone could plan perfectly well around that obvious point.

[Dr Whitehead]

The right hon. Gentleman might have jumped the gun in respect of the point he wanted to make about the effect of the proposed closure, but it is a different point from the one I am making about the closure. My point is that we stand in danger not only with respect to investor confidence, investor certainty or other considerations about what investors should do, which I shall come on to in a minute, but in respect of what we do, potentially exposing this House to legal action. Although the Government will have closed the renewables obligation administratively, they will not have closed it legislatively. There could be difficulties if discussions here and in the other place mean that the Bill receives Royal Assent after 31 March 2016.

--- Later in debate ---

[John Redwood]

Is the hon. Gentleman inventing a new doctrine: that Governments should never try and change the law because the Opposition might delay it?

[Dr Whitehead]

Again, the right hon. Gentleman misses the point I am making. This is not about the Opposition attempting to delay the imposition of the law. It is about the rush to close the renewables obligation on the part of the Government, not the Opposition, and the subsequent, rather dilatory way in which the Energy Bill was placed before this House—and, indeed, the way in which it has been scheduled in this House and the distinct possibility that further stages of the Bill may be scheduled. The net result of that dilatoriness in the legislative process is that the Government, not the Opposition, may put us in a position where retrospective legislation is apparently the case and the possibility of legal action is also apparently the case. It is important that we remember that today. One reason I am suggesting that the closure of the RO ought to be much later, albeit still early, is that it would avoid that potential legal action.

In reality, we know that the proposed closure of the renewables obligation a year early is not about implementing a manifesto pledge. The RO is not a new subsidy—that is what was in the Conservative manifesto. Indeed, we had discussions about that in Committee. The proposals before us are not only about putting an end to something that has been in place for a considerable period, that has worked well and that was about to change, in good time, to a new system that allows for degression in underwriting and a path towards effectively dissolving subsidies for a technology that has achieved close to market parity; they are about putting an end to something that industry investors were clear and confident about. Investors were confident not just because the renewables obligation had worked for a while; there was also a clear process whereby it would come to an end and a clear line of progression to contracts for difference—the new system, which we discussed at some length during the passage of the Energy Act 2013—and an orderly roll-out of renewable energy as something progressively more effective and cheaper.

--- Later in debate ---

[Dr Whitehead]

The question of whether the capacity auction should have been brought forward is secondary to the extent to which the Government believe that the auction will actually produce new capacity, as I am sure the hon. Gentleman is fully aware. Like the levy control framework, capacity auctions warrant a much deeper reorganisation than the rather tepid arrangement undertaken by the Government. Simply bringing an auction forward by a year, using roughly the same parameters about the likely clearance price and the distance between the clearance price and the likely price necessary to secure any new investment over a 15-year period for new gas-fired power stations, does not strike me as the smartest way to procure longer-term capacity in the capacity market. A deeper reorganisation of capacity auctions is required to secure that aim over the next period.

Before that intervention, I was briefly thinking about the subject of my amendments 23 and 52, to which I wish to draw the House’s attention. If the Government were serious about the proposals in their manifesto—that schemes that have local support should proceed—they should immediately adopt these amendments. They are about schemes where all the right moves in getting local agreement to the plans have been undertaken, all inquiries, concerns and planning arrangements have been dealt with, the schemes are on the cusp of getting agreement at planning and local authority level, and they have the support of local communities, but the Government have just pulled the plug on them and they now cannot proceed. The Government ought to adopt these amendments if they were, in principle, serious about their own principle that local areas should decide on local schemes and that those local schemes could be supported where local communities support them. Conversely, I fear that if clause 80 remains in the Bill, as amended, we will have in store a programme of onshore wind execution and not the execution of an onshore wind programme.

Labour’s vision is for a locally supported, appropriate programme of onshore wind deployment, complementing other renewables such as solar, biomass, offshore wind and tidal in reaching renewable targets, not because we have to, but because it is the right thing to do in ensuring that we have a balanced, low-carbon energy mix for the future. This clause points us squarely in the opposite direction and I urge hon. Members to support amendments that put us back on track again.

[John Redwood]

I rise to support the Government and to urge the rejection of amendments that would delay getting rid of the subsidies for wind power. Our country desperately needs more electrical power to be available, and I am pleased that the Government are now taking action, with capacity auctions, to try to get some more power available. We need more affordable power. We need to tackle fuel poverty and have power at prices that households can afford. We also need to have affordable power for extra industry, which is one of the Chancellor’s aims. We need reliable power; we want to know that the power is there whether the wind is blowing or not, and whether the sun is shining or not. People expect continuous power, in order to light and power their homes, and industry needs continuous power for its processes. On all those grounds, wind does not cut the mustard, and I am glad that we now have a Government who recognise that.

When the history of the past 15 or 20 years comes to be written, what the European Union is doing and what the previous Labour Government did on energy policy will go down as one of the catastrophic failures. It will be at least as big as the exchange rate mechanism, which destroyed so much activity, jobs and prosperity in our country. It may not be as big as the disaster of the euro, but it will be one of the big, classic disasters of the European Union that Europe as a whole is becoming an area of too little energy and very high-cost energy, driving industry out of the European Union area and into Asia and America, where more plentiful and affordable energy is available. Far from sparing the planet extra carbon dioxide, all this mad policy is doing is making sure that the carbon dioxide is produced somewhere else, rather than within the European Union itself.

Germany has much more wind power than we do and many Opposition Members admire it in this respect, but what happens when the wind does not blow? I will tell them what happens: Germany relies on a large number of extremely dirty coal power stations to churn out the electricity, producing more carbon dioxide than it would if it had opted for a fleet of modern gas stations in the first place. On average, that would have been better than this strange mixture of intermittent wind, which is very good on carbon dioxide when the wind blows, and back-up power, which in Germany and elsewhere in Europe is often generated from coal, and is extremely bad on carbon dioxide when the wind does not blow.

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[John Redwood]

No, I have not had the chance to reflect on that, but it does not seem to be a very interesting observation given the fundamental truth that I have just given him, on which the hon. Gentleman has not reflected at all. The truth of our current energy policy—

[Dr Whitehead]

rose—

[John Redwood]

Let me just deal with the hon. Member for Carmarthen East and Dinefor (Jonathan Edwards), and then I will happily deal with the shadow Minister. The truth about our energy policy is that the various interventions have conspired to make less power available at a much higher price and that, unless we start to reverse some of those interventions, we will get those pernicious effects. If he is saying that, yes, the price of energy from fossil fuels is variable, depending on the world market price, that is self-evidently true, but it does not mean that it is a good idea to put in something that is very unreliable and intermittent and is dearer than fossil fuel at more or less any realistic market price that might be commanded in the market by fossil fuel.

[Dr Whitehead]

Has the right hon. Gentleman had the opportunity to go to the national balancing services centre, which is in his constituency, as it undertakes a great deal of work balancing the system? There are substantial constraints on non-fossil fuel as well as fossil fuel inputs to the system, which cause shortages in power delivery at various stages, whether non-fossil fuel or fossil fuel delivery. Perhaps he could reflect on that in his comments.

[John Redwood]

Of course, as Member of Parliament for Wokingham, I have visited the centre on several occasions, and met the dedicated group of people there. The last time I visited was quite recently, and they were saying to me how much more difficult it is to manage a system that relies on wind, which is becoming more and more intermittent. That is self-evidently true. I am grateful to the hon. Gentleman for reinforcing my point, although I am not sure whether that was what he was trying to do. It used to be much easier when we had baseload power that could be relied upon and that was not interrupted by changes in the weather or the wind, and where the swing factor could be accounted for primarily by the pumped storage systems at Dinorwig. A command could be sent from Wokingham to Dinorwig. The water would come down the hill very quickly, and the kettles could boil in the interval of the big movie or whatever it was that was causing the surge in power demand. It is much more difficult now to call up power if, at the same time, the wind suddenly drops.

That is leading to our having to put in more and more interconnectors with other countries, so we become a net importer of power on a more regular basis, which is not something I value. I want us to have security of energy supply in our own country. We are, after all, an island of coal in a sea of oil and gas, and one would think we could find environmentally acceptable ways of exploiting that and burning it to produce the power we need. As I want an industrial revival in this country, that could well start with us importing less electricity.

Energy Bill

Debate between John Redwood and Alan Whitehead

Wednesday 4th December 2013 Commons Chamber

[Dr Whitehead]

Yes, indeed. If the Department is to reach its 2030 decarbonisation target, it is very likely that carbon capture and storage must be applied to gas as well as coal during the intervening period.

[Mr Redwood]

Given the hon. Gentleman’s knowledge of the industry, can he tell us when he expects to see a decent-sized coal-fired power station with carbon capture and storage up and running in the United Kingdom?

[Dr Whitehead]

The Saskatchewan power plant that I mentioned is not a new coal-fired power station, but an existing one that has been refurbished to take on carbon capture and storage. The right hon. Gentleman’s question should have been the other way around: he should have asked me when I might expect to see an existing coal-fired power station with carbon capture and storage attached to it in the United Kingdom if the amendment is passed. My answer is that if the amendment is not passed, it will be far less likely that existing coal-fired plants, which are effectively given a derogation by the Bill, will take on carbon capture and storage, although they know that they must do so sooner or later for the sake of future investment. They will do it in the end, but there will be uncertainty for some time before they do.

My answer to the right hon. Gentleman’s question is that I expect an existing coal-fired power station to start to address itself partly or wholly to carbon capture and storage much earlier if the amendment is passed than it would otherwise. That would put that station bang in line with the Department’s long-term decarbonisation aims.